Taxation and your business
Tax relief for business proprietors on 'private' interest payments
Provided you have built up a significant balance on your business current account, it may be possible to achieve income tax relief on borrowing required personally for non tax-allowable purposes such as home improvements - but you do need your bank's prior agreement. Very careful planning and organisation is required, but here is a brief summary.
First, you withdraw part, but not all, of your funds from the business to finance the private expenditure. After as lengthy an interval as you and your bank can tolerate, you then borrow money to put back into your business as capital. As long as this money is used wholly and exclusively for business purposes, tax relief should be available on the interest.
However, you will need to have some commercial justification in case the Revenue alleges that the arrangements have only been made to obtain tax relief.
Clearly, this should not be contemplated without very careful advance discussion with us.
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